The fund, managed by Kotak Mahindra (UK) Ltd's Singapore branch, has had its first closure of $90 million (about Rs 490 crore) and will invest $30 m to $40 m (about Rs 160 crore to Rs 215 crore) in Indian wind, solar and hydropower companies. Investors from Israel and Canada have also invested in the offshore fund. "There is an untapped potential in this sector and it is difficult to implement coal-fired power plants," C Jayaram, joint managing director at Kotak Mahindra BankBSE 0.75 % said. In 2010, Sumitomo, a 4.2 per cent stake holder in Kotak Mahindra Bank, Brookfield and Kotak Mahindra Bank joined hands to raise about $300m (about Rs 1,630 crore) to invest in Indian infrastructure developers.

A lack of policy initiatives, difficulty in acquiring land and delay in government clearances have deterred foreign investors from making fresh investments in infrastructure PE funds. Many infrastructure PE funds are caught in a fix due to lack of returns to investors, low net asset value of portfolio companies and poor execution by promoters hurting investments in Indian companies.

Sumitomo Mitsui Banking Corp has invested $22 million (Rs 120 crore) out of its $30-m (Rs 160 crore) commitment to the fund, while Brookfield has invested its full commitment of $20 million. The Kotak group has committed $15 million (about Rs 82 crore) and has put in $10 m (about Rs 54 crore), while JBIC has invested $22m.

The fund will raise the remaining amount from institutional investors in Canada and Japan.

"We expect lots of interest from Japanese and Canadian investors," said Jayaram. The fund stayed away from tapping investors in the US as under the Paul Volker rule, Sumitomo Mitsui Banking Corp cannot tap investors for private equity funds.

The fund is already scouting for investment opportunities, and $30-$40 million will be the sweet spot for the fund. "The first investment is expected to be sealed by the end of the first quarter of the next financial year," Jayaram said.

Though infrastructure has run out of favour for investors - both private and public - renewable energy continues to be a hot theme for investors in India as well as abroad.x